From kitchen table to financial institution?

PeterBrimelow

NEW YORK (CBS.MW) -- Are institutions the shadow of great men?

C. Alexander Green, Investment Director of The Oxford Club thinks so. "The time has come to sell the Zweig Fund
ZF, -0.07%
" he wrote recently. "This has nothing to do with the outlook for the market. Rather it's because Wall Street legend Marty Zweig announced last week that he's giving up his role as chairman of the board and officer of the fund as of the 30th of this month."

"His replacement is a colleague of his for four years, Philip R. McLoughlin. "I'm sure Philip McLoughlin is a capable fund manager. As the former chief executive officer of Phoenix Investment Partners, he has served on the board of more than 40 funds.

"But he's not the same caliber as Warren Buffett or Bill Gross or Mark Mobius. In short, he's not an Oxford All-Star."

A what? The explicit snobbery of the Oxford Club (which has no connection with the university) agitates my Anglophobia -- and I was born in England. But I guess the natives go for it.

Mark Hulbert, who despite being a child of the Corn Belt actually is a graduate of Oxford University, reports that the Oxford Club has lost an annualized 5.1 percent since 1995 -- worse than gold. But it has outperformed the market over the past three years.

So you have to be tolerant. I guess. Marty Zweig says he will still have a role in the running of the Zweig Fund and The Zweig Total Return Fund
ZTR, +0.08%
both closed-end funds. And he is still involved with the private Zweig-DiMenna hedge funds.

But it's still the end of an era. Marty Zweig has become a financial institution after literally starting on his kitchen table -- well, OK, the living room of his one-bedroom Manhattan apartment -- as a young finance professor just out of Wharton in the early 1970s.

Curiously immune to the Efficient Market Hypothesis that dominated financial academe at the time, he developed an eclectic combination of the fundamental (earnings, assets) and technical (momentum, sentiment). Over the years, he became intensely short-term, one of the most active traders that Mark Hulbert has followed.

And it worked -- Zweig was Hulbert's top performer for several years until he closed his letters to focus on money management.

But he paid a price. After one hard trading day, I remember him throwing down his chopsticks in mid-Chinese meal with a grimace -- his stomach was still off chasing the Dow.

You worried, because he was one of the nicest letter editors you could meet. Admittedly, that may not be saying a lot. But Marty actually is nice.

The 1974 bottom was a terrible time for Marty Zweig. He had been an early bear, but then he several times tried to call the bottom, finally succeeding by toughing out for several months the end of the year.

"You're talking to a guy who's been wrong," he told New York Magazine that October, when he was featured in a cover story titled "The Bulls Of Wall Street (Both Of Them)."

The other bull later killed himself.

Which is maybe why Marty was so cautious in the Zweig Fund semi-annual report dated August 1 this year, i.e. when the market was about where it is now. Normally, he said, he would read his indicators to mean he should be 95 percent invested. But in fact he was over a quarter in cash, waiting to see some sign of momentum.

You could read that to mean the end of the bear market should be somewhere around this level. But Marty will be missed.

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